Kolkata, 27 March : The announcement of RBI this morning to cut the Repo rate by 75 bps to 4.4 per cent and reduction of CRR to 3 per cent was heartily welcomed by the city’s premier Merchants’ Chamber of Commerce and Industry (MCCI).
Commenting on the announcement by RBI Governor Shaktikanta Das earlier today easing liquidity constraints in the economy in view of the Corona virus pandemic,MCCI Deputy Director General Subhashis Ray said the move to cut the Repo rate by 75 bps to 4.4 per cent and reduction of CRR to 3 per cent ‘would inject the much-needed liquidity into the sagging system and will help in reviving investment and growth in the short to medium terms’.
While the rate cut at this point was unlikely to revive loan demands in the market, it could definitely boost the morale in the financial market at this difficult time, he said.
According to him, MCCI also appreciated the fact that the Central Bank had allowed all banks and lending institutions to extend a 3-month moratorium on all loans, interest payments and EMIs. ‘This will provide a breather to corporates and retail investors as well as the borrowers’.
Also welcoming the RBI’s decision to conduct Long Term Repo Operation (LTRO) auction of Rs. 1 lakh crore of three years maturity, Ray said the first auction of Rs 25,000 crore would be conducted today. ‘This would lead to a significant liquidity injection to corporates starved for cash and help companies which are suffering from loss of business and income and burden of paying salaries and benefits to employees’.
However,at the same time he said ‘the Chamber feels that this 3 month moratorium could have been extended further given the trying times and the rate benefits could be passed on by banks suitably and seamlessly to the customers’.